Thursday, 5 November 2015

Despite US equities closing moderately weak, the VIX still settled a little lower, -3.0% @ 15.05 ( intra high 16.39). Near term outlook offers the 18/20 zone... along with a test of the 200dma in the sp'2060s.

VIX'60min

VIX'daily3

Summary

Suffice to say... we're clearly seeing some underlying upward pressure - with the highest intra level since Oct' 21st, as the broader US market is looking tired after a hyper ramp of 13.5% to sp'2116.

As London city - and other parts of the UK, continue to see nano-scale detonations this evening, US equities remain relatively subdued. There is clear trend support around sp'2080, and equity bears are going to need to gap sig' lower tomorrow morning to see any real fireworks into the weekend.

sp'60min

VIX'60min

Summary

Despite equity price structure remaining rather messy, there is more definitive structure in the VIX, which has clearly broken upward... and looks set for the 17/18s tomorrow.. which is highly suggestive of sp'2060/50s.

.. and I realise many will roll their eyes at the notion of any break under the 200dma... but that IS what the VIX is indirectly suggesting.
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notable weakness: QCOM, -17%, entering the next support zone of $50/48

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Awaiting key earnings at the close from DIS.

Best guess.. a move lower to at least $108. Any move <106 would break trend, and offer the $100 threshold, before resuming higher into.. and across spring 2016.

Whilst US equities are back into micro chop mode.. leaning a touch on the weaker side, there is far more significant weakness in Oil, -1.6% in the $45s. With the supply issue remaining completely unresolved... the threat remains of renewed downside.. aided by a strong USD.

USO, daily2

UUP, weekly

Summary

*the strength in the USD is something I've not highlighted in a while.

Clearly, a weekly/monthly close >DXY 100 will be a key signal.. after that is re-taken.. next target will be 120s.
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As for equities, there will very likely be a tendency for the market to cool into the close..whether we settle <2090... difficult to say.

What will be important for the equity bears... a break <2080 early tomorrow.. which would then offer a weekly close in the 2065/55 zone.. along with VIX 17/18s.

With Gold prices fractionally lower for a seventh consecutive day, the related precious metal miners are seeing increasing weakness. The ETF of GDX is -3.3% in the $14.10s. New multi-year lows in the 12/10 zone look probable by year end.. not least if the Fed raise rates.

GDX, daily

GLD, daily

Summary

So... with the USD in the DXY 98s, commodities are under pressure... with Gold broadly weak, and that is not helping the miners.

It continues to bemuse me why some would think $1072 is a key multi-year low for Gold. No.... we're headed at least to test the giant psy' level of $1000.. which if the Fed raise rates at the Dec' FOMC.. will be hit before year end.

US equity indexes remain negative, if only moderately, having swung from an early high of sp'2108 to 2090.. with VIX clawing to 16.39. Mr Market is clearly anxious ahead of the Friday jobs data, with threat of an initial washout to the 200dma (2062) Metals remain broadly weak, Gold -$1, with Silver -0.5%. Oil is -1.5% in the $46s.

sp'daily5

GLD, daily

Summary

There is a great deal of individual stock action, but in terms of the broader market of course.. price action remains only moderately interesting.

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re: metals. Day'7 down for Gold/Silver, and that is not helping the related mining stocks, GDX -3.2%. Outlook looks dire into year end.. especially if the fed finally raise rates.

US equities are (not surprisingly) unable to hold the minor opening gains.. with the sp' set to cool to the 2080s. VIX is leading the way, breaking into the 16s.. headed for the 18/20 zone.. which would equate to the 200dma of sp'2062. Oil remains increasingly weak, -1.7% .

sp'daily5

VIX'daily3

Summary

*I am trying not to get lost in the minor noise, and highlight the bigger daily charts this hour.
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So much for the opening high of sp'2108 huh?

At the Friday open there will be trend support around 2080. Any gap under 2080.. will be highly suggestive of a weekly close.. somewhere in the 2065/55 zone.

Broadly.. a 38% retrace to the 2020s looks due... but that is clearly not in range until next week.
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notable weakness: DIS, -1.4%.. ahead of earnings.

The daily MACD cycle has turned negative.. and there is a viable fierce gap lower tomorrow.. at least to the 108/105 zone.

The US equity market opens a little higher, but the gains look unsustainable. First soft target is the daily 10MA (2088)... which will open up the 200dma (2062) as early as tomorrow. Oil is lower for a second day, -0.6%.

sp'daily5

Summary

So.. we're a little higher, but we sure ain't likely going >2116 today. Indeed, a close in the 2090/85 zone looks probable.. along with VIX 16/17s.

I am aware some of you out there are seeking new historic highs >2135 before a sig' retrace ahead of the Dec' FOMC.

That is a valid scenario... but considering the weakness in Oil... and the daily equity MACD cycles (set to turn negative tomorrow/Monday) ... I'm guessing NO.

First retrace target is the 200dma in the low sp'2060s. Any action in the 2050s would bode for at least a 38% fib retrace to around 2020... before Nov' opex.

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Amongst a great many notable movers...

QCOM

Earnings were actually okay (despite what some say)... but having formed a micro double top.. at old broken support.. the stock has seen a fierce break lower. Next support is the Sept' low of $52.17.
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Whilst US equities saw moderate weakness in the Wednesday session, there was notable strength in the China market, with the Shanghai comp' +4.3% @ 3459. The jump higher was due to 'recycled news'. Even after a subsequent realisation though, the market held the gains.

China, daily

China, monthly

Summary

Unlike the US market, the Shanghai' comp' - along with most other world markets, is still to attain a monthly close above the key 10MA.

For China, that currently stands @ 3715. A Nov' or Dec' close in the 3800s is rather important.. and would then offer hyper upside in 2016... at least to 5K, and almost equally viable, test the historic 2007 high of 6124.

... and yes.. I recognise that a move from 4K to 6K is a clear 50%.... but then the move from 2K (summer 2014) to 5K (summer 2015) was a monstrous 150% ramp.

US equity indexes closed moderately weak, sp -7pts @ 2102 (intra low
2096). The two leaders - Trans/R2K, settled lower by -0.6% and -0.1%
respectively. Near term outlook offers a cycle high of 2116, with first
downside target of the 200dma (2060s), and secondary of the 2020s.

sp'daily5

Trans

Summary

A second day lower for the 'old leader' - Trans. First support is the 50dma... about 1.5% lower.
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Sp'500 looks to have a short term cycle peak of 2116. A retrace to the 200dma in the 2060s looks highly probable.. if not the 2020s before Nov' opex.

From there... broadly higher into year end... even if the fed raise rates 25bps.

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I (Permabear Doomster) am not a financial advisor as officially endorsed by any national government, corporation, financial/securities regulatory authority in neither the USA, UK, or any part of the world. None of the posts/comments in these pages are intended as trading/investment advice. They are merely my opinion on where a given market/stock and any other 'instrument, index, etc' may move at any future time.